“EMWG failed to organise and control its regulated business effectively. In particular, it did not keep an adequate record of the PPI sale on customers’ files or provide customers with a statement of the total price for the PPI policy.
“In addition it did not sufficiently apportion compliance responsibilities among its senior management and did not ensure adequate training and monitoring of its sales staff,” the FSA said in a statement.
EWMG is a franchised car dealer with a significant presence in Scotland and Newcastle-upon-Tyne. Its primary business is the sale of new and used cars with PPI being sold to cover vehicle finance agreements.
Margaret Cole, FSA director for enforcement, said: "The sale of PPI is a priority for us due to the high potential risk for consumers in the way this product is sold.
“EWMG's failings, particularly those regarding the statement of price, created a risk of consumer detriment. A clear statement of price is essential in order for a customer to be able to determine whether the PPI policy is the right product for them. EWMG could not determine whether sales staff were operating in a way which paid due regard to the information needs of customers, as there was little or no monitoring of sales staff. We have taken a number of enforcement actions relating to PPI recently and there will be more to follow."
In determining the penalty level the FSA took into account a number of mitigating factors. The number of PPI policies sold by EWMG was low and the firm had sought independent compliance advice prior to FSA supervision interest, indicating an intention to comply with FSA requirements. EWMG cooperated fully with the FSA and in the relevant period, only one complaint was received in relation to PPI cover. But for the limited number of PPI policies actually sold, a financial penalty would have been proposed.